Issue 30: 2015

Family Wealth Services

Millennials and Inheritance

A two-part primer for parents and their children.

» Click here to access your account and more insights.

» Not a client yet? Click here to find an office or have us contact you.

Click on the icons below to navigate between parents and millennials.

PART TWO: MILLENNIALS

Like it or not, “We’re all shaped by the economic, social and political climate we’re raised in, so we inevitably share some traits or views with others in our generation,” says Paul D. Stavig, a wealth strategies advisor at U.S. Trust. “Your generation” — labeled “millennials” by a couple of baby boomers — “has its own characteristics and influences.” Take a look at the list on the next page and see how it aligns with your own experience.

Inheritance 101

Here are a few key things to know when it comes to millennials and inheritance:

  • “Many millennials aren’t waiting for an inheritance,” Stavig says. “They are making their mark now as entrepreneurs and job creators.”
  • An inheritance can come in many forms, including cash, securities (stocks and bonds), real estate and family business interests.
  • Assets may be held in trusts, which are arrangements wherein a third party (the “trustee”) holds and manages assets on behalf of a beneficiary or beneficiaries.
  • A trust invariably comes with certain rules or guidelines, established by the creator of the trust, that define things such as the amount and frequency of distributions, as well as under what circumstances they might be made.
  • Payments may be in a lump sum or staggered. Beneficiaries may receive funds on a regular basis (e.g., monthly or annually) or upon attaining a specified age. It’s important to understand the terms of the trust and the distribution patterns it provides, as this may impact the kind of lifestyle you’ll be able to maintain as you get older, as well as help you better plan for both yourself and your family for the future. In some circumstances a trust may include provisions that, in addition to periodic income distributions, allow for principal distributions based on prescribed standards in the discretion of the trustee(s).

 

Parents have concerns

Your parents may or may not have discussed inheritance with you. Either way, “It’s not uncommon for parents to be concerned that their children are inadequately prepared to handle significant wealth and the challenges wealth — through an inheritance or otherwise — can bring,” says Jody L. Weber, senior vice president, Client Segment Marketing at U.S. Trust. “There are a number of ways your parents may address these challenges with you.” They may:

  • Discuss family wealth in the context of family values. This may involve showing you a family mission statement that focuses on your family’s philanthropic goals.
  • Provide a financial management overview. Rather than get into specifics about your family’s wealth, they may provide insights on topics that help you become better managers of your own finances.
  • Introduce you to their advisors who have in-depth knowledge of financial topics and who may offer educational programs to help you build your own financial acumen.

Listen when they talk

Many parents avoid having “the talk” because they were raised to not discuss money and wealth. “If your parents talk to you about financial issues, listen to them and ask plenty of questions. As in so many of life’s more challenging situations, communication is a key element,” says Craig W. Bethel, a wealth strategies advisor at U.S. Trust. “And, while sometimes wealth is a difficult and uncomfortable topic of conversation, you and your parents will be all the better for having had it.”

IMPORTANT INFORMATION

Always consult with your independent attorney, tax advisor, investment manager and insurance agent for final recommendations and before changing or implementing any financial, tax or estate planning strategy.

Click on the icons below to navigate between parents and millennials.

PART TWO: MILLENNIALS

Like it or not, “We’re all shaped by the economic, social and political climate we’re raised in, so we inevitably share some traits or views with others in our generation,” says Paul D. Stavig, a wealth strategies advisor at U.S. Trust. “Your generation” — labeled “millennials” by a couple of baby boomers — “has its own characteristics and influences.” Take a look at the list on the next page and see how it aligns with your own experience.

Inheritance 101

Here are a few key things to know when it comes to millennials and inheritance:

  • “Many millennials aren’t waiting for an inheritance,” Stavig says. “They are making their mark now as entrepreneurs and job creators.”
  • An inheritance can come in many forms, including cash, securities (stocks and bonds), real estate and family business interests.
  • Assets may be held in trusts, which are arrangements wherein a third party (the “trustee”) holds and manages assets on behalf of a beneficiary or beneficiaries.
  • A trust invariably comes with certain rules or guidelines, established by the creator of the trust, that define things such as the amount and frequency of distributions, as well as under what circumstances they might be made.
  • Payments may be in a lump sum or staggered. Beneficiaries may receive funds on a regular basis (e.g., monthly or annually) or upon attaining a specified age. It’s important to understand the terms of the trust and the distribution patterns it provides, as this may impact the kind of lifestyle you’ll be able to maintain as you get older, as well as help you better plan for both yourself and your family for the future. In some circumstances a trust may include provisions that, in addition to periodic income distributions, allow for principal distributions based on prescribed standards in the discretion of the trustee(s).

 

Parents have concerns

Your parents may or may not have discussed inheritance with you. Either way, “It’s not uncommon for parents to be concerned that their children are inadequately prepared to handle significant wealth and the challenges wealth — through an inheritance or otherwise — can bring,” says Jody L. Weber, senior vice president, Client Segment Marketing at U.S. Trust. “There are a number of ways your parents may address these challenges with you.” They may:

  • Discuss family wealth in the context of family values. This may involve showing you a family mission statement that focuses on your family’s philanthropic goals.
  • Provide a financial management overview. Rather than get into specifics about your family’s wealth, they may provide insights on topics that help you become better managers of your own finances.
  • Introduce you to their advisors who have in-depth knowledge of financial topics and who may offer educational programs to help you build your own financial acumen.

Listen when they talk

Many parents avoid having “the talk” because they were raised to not discuss money and wealth. “If your parents talk to you about financial issues, listen to them and ask plenty of questions. As in so many of life’s more challenging situations, communication is a key element,” says Craig W. Bethel, a wealth strategies advisor at U.S. Trust. “And, while sometimes wealth is a difficult and uncomfortable topic of conversation, you and your parents will be all the better for having had it.”

IMPORTANT INFORMATION

Always consult with your independent attorney, tax advisor, investment manager and insurance agent for final recommendations and before changing or implementing any financial, tax or estate planning strategy.